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Established Contributor
Watchmann
Posts: 989
Registered: ‎05-14-2008
0

Re: Chase Minimum payment

People don't seem to understand that all financial products are based on RISK.  That is priced in to the cost of the product.  When ultra low interest rates were quoted for BT's that were below market rates people were foolish to believe they were getting something for nothing in perpetuity.  Some people did get a good deal if they paid off the BT quickly, but many were lulled into thinking that that $20,000, 1.99% APR for life transfer was cast in stone.  No bank is going to lock in a money losing deal like that without some escape clause in the event things go bad.  People now call this 'evil' or 'sleazy', but it is the natural consequence of getting below market rates.  As others have said using CC's for long term financial needs is not a good idea, they are a poor replacement for an installment loan with a fixed term and a fixed rate (although that rate will be higher).  A cardinal rule must be observed when contemplating borrowing money from a CCC.........HAVE AN EXIT STRATEGY AND ESCAPE PLAN.  That is, get out of the deal ASAP, and have backup funding in place (not another CCC) in the event things go sour.  If you don't have that in place, stay away from CC loans.  If we are all going to insist on ironclad rates and terms from the CCC's we will be back to the old days of 18% APR's for everybody.
Established Contributor
Posts: 742
Registered: ‎12-19-2008
0

Re: Chase Minimum payment


Watchmann wrote:
People don't seem to understand that all financial products are based on RISK.  That is priced in to the cost of the product.  When ultra low interest rates were quoted for BT's that were below market rates people were foolish to believe they were getting something for nothing in perpetuity.  Some people did get a good deal if they paid off the BT quickly, but many were lulled into thinking that that $20,000, 1.99% APR for life transfer was cast in stone.  No bank is going to lock in a money losing deal like that without some escape clause in the event things go bad.  People now call this 'evil' or 'sleazy', but it is the natural consequence of getting below market rates.  As others have said using CC's for long term financial needs is not a good idea, they are a poor replacement for an installment loan with a fixed term and a fixed rate (although that rate will be higher).  A cardinal rule must be observed when contemplating borrowing money from a CCC.........HAVE AN EXIT STRATEGY AND ESCAPE PLAN.  That is, get out of the deal ASAP, and have backup funding in place (not another CCC) in the event things go sour.  If you don't have that in place, stay away from CC loans.  If we are all going to insist on ironclad rates and terms from the CCC's we will be back to the old days of 18% APR's for everybody.

+1

Senior Contributor
txjohn
Posts: 4,214
Registered: ‎09-12-2008
0

Re: Chase Minimum payment


plasticman wrote:

Watchmann wrote:
People don't seem to understand that all financial products are based on RISK.  That is priced in to the cost of the product.  When ultra low interest rates were quoted for BT's that were below market rates people were foolish to believe they were getting something for nothing in perpetuity.  Some people did get a good deal if they paid off the BT quickly, but many were lulled into thinking that that $20,000, 1.99% APR for life transfer was cast in stone.  No bank is going to lock in a money losing deal like that without some escape clause in the event things go bad.  People now call this 'evil' or 'sleazy', but it is the natural consequence of getting below market rates.  As others have said using CC's for long term financial needs is not a good idea, they are a poor replacement for an installment loan with a fixed term and a fixed rate (although that rate will be higher).  A cardinal rule must be observed when contemplating borrowing money from a CCC.........HAVE AN EXIT STRATEGY AND ESCAPE PLAN.  That is, get out of the deal ASAP, and have backup funding in place (not another CCC) in the event things go sour.  If you don't have that in place, stay away from CC loans.  If we are all going to insist on ironclad rates and terms from the CCC's we will be back to the old days of 18% APR's for everybody.

+1


 

As a practical explanation why banks offer such "deals" in the first place, it is due to supply and demand of money.  In past years there was a surplus of available money for loan, investment and placement.  If banks did not place the money, they lost the opportunity of income, plus possibly paid a cost for its inventory on the books.

 

However, when other opportunities with better return or lower risk present themselves, banks thus adjust the levers of revolving and variable term products to reflect the market.  Minimums may be raised in percentage of principal payments, some terms provide for raising the APR and others both.

 

I'm not advocating any side, but it is important to analyze the triggers and factors related to such actions.  Since the money was placed at these rates during times of surplus capital, the banks would now like to recoup that capital because it is not in surplus any longer and they can place it in better return or possibly lower risk investments/loans/credit.

 

Revolving debt is like a hybrid demand debt.  The CCC's gladly loan it while they have no better use.  But once a better use (meaning to their better use), they begin to make the demand, not by calling the loan due, but by raising the cost of credit and increasing the minimums.  All of this is intended to provide incentive to get the debts paid down and the capital recovered more quickly in order to reduce capital risk exposure and also to reflect the rates of alternative uses if they had the capital for use at that time.

 

But I will state again, I think the way Chase handled this was extremely poor judgement from all standpoints that I can see.

 

 

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Regular Contributor
FocusOnFICO
Posts: 180
Registered: ‎05-01-2009
0

Re: Chase Minimum payment

I also agree with the reasonsing of txjohn and the sentiment of hauling.

 

Specifically, it is an unfortunate series of events for Chase customers.  I typically see a new Chase thread every day that reiterates the details of a large bank that is making some questionable business decisions.  I firmly believe that the posters that have pointed out the business aspects of the issue fully understand the personal pain that is going on with those adversely affected.  We, individually, are either a direct part of that group, or know quite well someone in the group.  I have counseled many of my friends, etc. that are affected and have heard the blow-by-blow details again that I've read on our forum's pages.  It is painful.

 

The advice given by some may not have been worded ultra-gently, but these facts I believe are helpful to keep in mind:

  • the comments posted are really indeed written to help those adversely affected
  • the initial transaction, no matter the purpose intended by the borrower, was a business decision
  • the subsequent actions by Chase, although viewed as poor business decisions--especially by those from the 22nd row--are business decisions nonetheless
  • thorough vetting of both lender and borrower positions and options was either not performed initially, or is not seen as a viable option now, as many borrowers are stuck

 

The eventual recommendations for those affected--and those who may be--are consistent with others who have posted issues with massive cc debt and similar situations.  These are the questions:

  • knowing what you now know, would you have made the business decision (borrowing, etc.) that you initially made?
  • are you doing whatever actions are possible to correct the income/debt defiencies?
  • specifically, are you truly living within your means?
  • do you have 6+ months of living expenses stored in a savings account as a goal or completed goal?
  • have you vetted your credit portolio partners (lenders) to choose or qualify for the best mix of credit union, small bank, and large bank products to meet your actual needs?
  • do you have a backup plan in place for your employment, housing, and automobile should you lose--or be in risk of losing--any of them?

 

In the end, unfortunate things happen to the best people--it's a fact of life.  No one one this board denies that the impacts are severe to many.  But it is also important to know that agreeing with those affected and consoling can only go so far.  The posters that have provided a more "tough love" approach (in the eyes of some) are really, in their own way, now trying to redirect those affected to move proactively into the next phase of correcting their situation.  There is a reason why there a many, many, many Chase threads.  They are a know quantity--or should be--at this point.

 

If you are a happy Chase (or any lender) customer, great -- but have a backup plan.

If you are now and adversely affected Chase (or any lender) customer, great than you have a backup plan that you will use to help yourself.


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Member
bredan
Posts: 11
Registered: ‎02-08-2008
0

Re: Chase Minimum payment

[ Edited ]
I have not written in a while ,but wanted to thank you for just seeing the truth,and making a sensible comment without trying to judge someone.I did just what I said made an agreement, the fee for that agreement,kept my part of it,but they did not to me,and 850,000 other people,all before cc laws go into effect,but again you just need someone to see it for what it is and you did. Thanks to BOYYDZ
Message Edited by bredan on 08-20-2009 04:06 PM
Message Edited by bredan on 08-20-2009 04:07 PM
Valued Contributor
usmc58555
Posts: 1,668
Registered: ‎02-18-2009
0

Re: Chase Minimum payment


bredan wrote:
,but again you just need someone to see it for what it is and you did.

You mean

 

-Completely legal

-Completely within their rights

-What you signed up for

-What you agreed to.


yep thats pretty much what it is.

 

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Moderator
MarineVietVet
Posts: 14,960
Registered: ‎07-14-2009
0

Re: Chase Minimum payment

You mean

 

-Completely legal

-Completely within their rights

-What you signed up for

-What you agreed to.


yep thats pretty much what it is.

 

 

 What happened to "Friendly, Supportive, and Respectful"?

Frequent Contributor
CreditCard101
Posts: 401
Registered: ‎02-23-2009
0

Re: Chase Minimum payment

Everyone knows obtaining financial services are also RISK. Risks of fraud, risk of rate jack, risk of identity and information theft. Financial institution have nothing to LOSE, they are backed by the government (How, from the bailout money). Who pay for it? Taxpayers... But the people are backed by WHOM. The answer is NO ONE!

Actually consumers have more risks than banks or any financial services....

Moderator Emeritus
fused
Posts: 16,373
Registered: ‎03-12-2007
0

Re: Chase Minimum payment

Ladies and Gentlemen, this is a reminder to keep your post friendly and supportive.

 

--fused, myfico moderator

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All three scores were 850. Lost points for not having an open installment TL. So, BE WARNED!!!!!
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Senior Contributor
creditwherecreditisdue
Posts: 4,923
Registered: ‎04-19-2009
0

Re: Chase Minimum payment


CreditCard101 wrote:

Everyone knows obtaining financial services are also RISK. Risks of fraud, risk of rate jack, risk of identity and information theft. Financial institution have nothing to LOSE, they are backed by the government (How, from the bailout money). Who pay for it? Taxpayers... But the people are backed by WHOM. The answer is NO ONE!

Actually consumers have more risks than banks or any financial services....


 

I think not. Ask the many stockholders of banking institutions who saw the value of shares plummet to zero! Be glad you are not one of them.

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